USDCAD has been underperforming since yesterday, remaining below the four-month high of 1.3265. Currently, the price holds above the very short-term rising trend line, but in case of a penetration it would move even lower in the near term. Also, when looking at the bigger picture the pair has a clear upside trend after its rebound on the 1.2060 support level.
Momentum indicators in the daily timeframe, are too weak to provide a sustained move higher as the RSI is sloping to the downside and MACD dropped below the trigger line.
In the event of more negative pressures and a slip below the 20-day simple moving average (SMA) the pair could re-challenge the 23.6% Fibonacci retracement level of the upleg from 1.2060 to 1.3385, around 1.3072. A significant leg below this region and the 40-day SMA could see a test of the 1.2910 support, before being able to hit the 38.2% Fibonacci mark of 1.2880.
However, a jump above the 1.3265 – 1.3290 resistance area, the market could meet the one-year high level of 1.3385. Further increases could move the price towards the 1.3550 barrier, identified by the peak on May 2017, creating a new higher high in the long-term ascending movement.
Turning to the long-term view, the market seems to be in a bullish mode given that USDCAD still trades above the 20- and 40-day SMAs and well above the ascending trend line, which has been holding since September 2014.
